With the Internet putting extreme pressure on the way you’ve always done business, it’s easy to feel helpless. First, take a moment to console yourself that you are not alone. Virtually every business in every industry has had to rethink and restructure its business model to continue to compete in an age of instant digital gratification and universal price transparency.
Culture Forces Retail Change
Take department stores, for example. From their peak in the 1980s, as coveted anchor tenants of large shopping malls, the 56 individual U.S. department-store banners that were operating 30 years ago have shrunk to just 12 banners today. Filene’s, J.C. Penney, Lord & Taylor, Macy’s, Nordstrom, Sears and others have closed stores or been moved by their landlords out of their anchor positions. Mall landlords are desperately looking to reinvigorate customer traffic, and rebuild sales-per-square-foot, calling on newer retailers that offer more relevant products and services to today’s shoppers.
In place of department stores are fast-fashion clothing stores with rapidly changing inventories that appeal to fickle consumers who always seek the absolute latest style. Gyms and briskly expanding low-price membership fitness-club chains now have broad appeal to a culture increasingly interested in physical wellbeing. And sporting goods stores resonate with this emerging active “athleisure” persona of the culture. Multiplex movie theaters offer an endless stream of new consumable entertainment that attempts to satisfy our apparently insatiable need for stimulation.
Feed Me, NOW!
Restaurants are playing a large and increasingly prominent role in reconfiguring the U.S. retail landscape. A vivid illustration of the shift from the dominance of department stores: The Cheesecake Factory now does as much in total sales volume as Sears used to do.
And food for immediate consumption is part of an emerging macro trend in society. Over the last decade, households have spent an increasing amount on food-away-from-home, decreasing by a like amount what they spend for foods prepared at home. Today, the spending on eating out nearly equals that of spending on foods prepared at home. The explosion of options for eating out has facilitated this trend. Think Chipotle, Panera Bread, the dozens of upscale burger chains popping up all around the country, and the exciting, ethnically diverse street-corner food truck craze. Rather than being a special occasion, today’s culture embraces restaurant eating as an everyday event.
The Internet Is The Question, Not The Answer
Now that you’ve taken a moment to recognize the technology-driven cultural upheaval that has upset your business is also upsetting every retailer’s applecart, it’s time to figure out how you respond. Ground zero in the battle to regain control of your business requires understanding what purpose the Internet serves, and its limitations. The main use of the Internet, billions of times per day, is SEARCH. Not find, not answer. These things sometimes happen, but not always.
Always being a click away from what appears to be the complete body of human knowledge on your smart phone, you—and most of your customers—have immediate access to more information about what to buy than ever before in human history. And if raw information about products and services isn’t enough, consumers also have immediate electronic access to the opinions of experts, of critics, of other users, and of their peers.
But, does having access to more data make deciding what to buy easier? Have you noticed it takes gobs of time to sift through all this information and opinion before you feel you can make a decision, and yet often you are still uncertain?
This is especially likely if the consequences of making a wrong decision are high—such as when you are dealing with a health concern or making an expensive, discretionary purchase—you can become completely frozen by the tsunami of data that is supposed to make your life easier. It appears that, when it comes to personal health, humans still crave human contact to validate their choices.
If the Internet actually provided the definitive health answers shoppers seek, they wouldn’t need to inconvenience themselves by making a special trip in the car, and taking another hour out of their day. If the information and opinion available on the Internet were sufficient to answer people’s urgent, vital and intimate questions about health, you wouldn’t see them in your store at all.
Lamb Chops—Not Chopped Liver
It is time for you to embrace the crucial role you play in the consumer’s decision-making process. More to the point, it is time for you to require your prospective customer acknowledge this truth.
The Internet search phenomenon reminds me of the lady who comes into the butcher shop and complains when she sees the price of lamb chops at $12.99 per pound. “The butcher down the street has them for $9.99,” she whines. “Then why don’t you go there and buy them?” the butcher asks. “Because he doesn’t have any today,” the lady sighs. “Well, when I don’t have them, they’re $7.99 a pound!” the butcher cries. The lack of ability of the Internet to close the deal—to definitively answer consumers’ health questions—is like the butcher down the street who is out of lamb chops. You have the lamb chops. Do not allow your customer to treat you like chopped liver.
The next time a smart-phone-weaponized shopper comes into your store, pumps you for every imaginable piece of information about products and health concerns, and then—while standing right there in front of you—pops open an Internet browser with a price-comparison app, to see where they can buy it cheaper, be prepared. Rather than allow yourself and your highly paid, very knowledgeable nutrition team to be led on yet another 30-minute wild goose chase, have your ammunition ready.
We, as humans, are wired to feel obligated to repay a kindness, a gift, or a favor. This is the concept of reciprocity, which probably developed in human consciousness as a survival mechanism. Those who didn’t repay a kindness promptly later found themselves with a knock on the head issued by an angry, unrequited gift-giver. Whatever the reason, we do not feel comfortable being obligated to someone, and the desire to repay this kind of “debt” is strong.
By investing the time it takes to answer your customer’s questions about health, you are doing what most customers expect you to do as a retailer: provide information so that they can make a buying decision. Pre-Internet, this exchange of information for a product purchase was the norm. Your customer would usually intend to reciprocate your time by making a purchase from you in your store. Debt paid. Post-Internet, perhaps because of price transparency, consumers feel entitled to the lowest nominal price. The new reality is shoppers feel justified in discounting your investment in the transaction, despite the half-hour you’ve just spent helping them reach that buying decision.
Make It Real
To level the playing field against the Internet, what you need to do is make your investment—the intangible of your time and the knowledge you have given your customer—more tangible and real. Because today’s consumer premeditatedly intends to pump you for information and still go wherever they can to get the lowest price, you need to make their reciprocal obligation to repay you more apparent by demonstrating physical proof of your investment.
I remember a retailer in Brooklyn years ago who would keep a box full of branded trinkets and souvenirs, such as inexpensive pens, key chains and the like, under the counter, to playfully give away to customers as they checked out with their purchases. You should have seen the looks of joy on the faces of the delighted customers as they left the store!
Besides these fun baubles, you can and should look to your primary vendors and call on the brands you feature—who clearly understand the pressures you face with their products also available on the Internet—to cooperate in providing you with samples and promotional discounts to leverage in these situations. Using these vendor-provided incentives and promotional items, you can always have something ready to put into the hands of your cunning customer as your interaction with them is wrapping up.
By doing so, you will subtly force your clever shopper to accept or physically reject your—now visibly tangible—generosity. If, at the same time, you also place the item or items in their hands that address their health concerns, the moral pressure on them to reciprocate will increase even more. Done properly, with just the right amount of playfulness and flourish—of the sort your Starbucks barista employs when concocting your soy maple latte—you will make undeniable the emotional value inherent in your interaction.
At the very least, you will enjoy watching your now-conflicted customer try to reconcile their cognitive dissonance, to wit: “Am I truly justified in asking this nice, generous retailer for all the information in the world without intending to buy anything from them, or am I really just a moocher and a freeloader?” Perhaps our society is still capable of shame, although I am not confident in it. Perhaps you’ll let me know. WF
Published in WholeFoods Magazine September 2016
Jay Jacobowitz is president and founder of Retail Insights®, a professional consulting service for natural products retailers established in 1998, and creator of Natural Insights for Well Being®, a comprehensive marketing service designed especially for independent natural products retailers. With 39 years of wholesale and retail industry experience, Jay has assisted in developing over 1,000 successful natural products retail stores in the U.S. and abroad. Jay is a popular author, educator, and speaker, and is the merchandising editor of WholeFoods Magazine, for which he writes Merchandising Insights and Tip of the Month. Jay also serves the Natural Products Association in several capacities. He can be reached at (800)328-0855 or via e-mail at email@example.com.